Kitex Garments Hits Upper Circuit As Board To Consider Bonus Issue

Kitex Garments Limited witnessed a 5% surge in its stock price today, on Tuesday, November 19, 2024, hitting the upper circuit at Rs.637.15 after the Kerala-based textile manufacturer announced a board meeting to discuss a potential bonus share issue. The meeting, scheduled for Friday, November 22, will determine the recommendation and declaration of bonus equity shares, subject to shareholder approval.

Bonus Issue Proposal

In an exchange filing, Kitex Garments revealed plans to deliberate on a bonus issue with plans to reward shareholders. To maintain transparency, the company has enforced a trading window closure for insiders from November 19, which will remain in effect until 48 hours after the board’s decision.

What is a Bonus Issue?

A bonus issue involves distributing additional shares to existing shareholders at no extra cost, increasing a company’s share capital without altering its market capitalisation. Bonus shares are issued in a specific ratio and are often funded from a company’s reserves or retained earnings. This can make a stock more accessible to retail investors, boost liquidity, and signal financial health.

Kitex Garments has a history of rewarding shareholders through bonus issues. In 2017, it announced a 2:5 bonus issue, with the ex-bonus date set for June 22, 2017.

Financials 

Kitex Garments’ stock has shown growth, delivering a 183.05% year-to-date return. The stock reached its 52-week high of Rs.678.70 on November 8, 2024, and has climbed over 526% in the past five years. The company enjoys a market capitalisation of Rs.4,237.05 crore and trades at a P/E multiple of 54.60 with an EPS of Rs.9.74.

The company’s Q2FY25 results showed an 181.39% YoY increase in net profit to Rs.37.34 crore, while sales grew by 61.15% YoY to Rs.215.88 crore.

Conclusion: Investors are eagerly awaiting the board’s decision on the bonus issue, which could boost shareholder value and retail participation. Coupled with its financial performance, Kitex Garments continues to maintain its hold in the textile sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.